The Internal Revenue Service is giving overseas banks a six-month delay to the start of the Foreign Account Tax Compliance Act, the Treasury Department said. The law is designed to curb tax evasion by Americans abroad.
The extension of the act, or FATCA, follows a previous one-year delay announced in 2011. The latest extension, to July 1, 2014, will allow foreign banks time to comply with the law “while helping ensure efficient implementation,” the Treasury said in a statement today.
Financial institutions including Toronto-Dominion Bank of Canada and Allianz SE of Germany have expressed concerns that FATCA is too complex.
FATCA, passed by the U.S. Congress in 2010, will require financial institutions based outside the country to obtain and report information about income and interest payments accrued to the accounts of American clients. Banks and account holders that don’t comply would face a withholding tax of as much as 30 percent.
“Given the groundswell of international interest in FATCA, we are providing an additional six months to complete agreements with countries and jurisdictions across the globe, before withholding begins,” Robert Stack, the Treasury’s deputy assistant secretary for international tax affairs, said in the statement.